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Arts projects fail to attract investors

None of the participants in a digital arts accelerator programme designed to help cultural organisations attract commercial investment were able to convince investors that they could deliver sufficient financial returns.

Abandon Normal Devices, one of the organisations involved in the accelerator programme

The potential for arts and cultural organisations to improve their resilience by attracting commercial investment in their work is in doubt following an evaluation of the impact of the Digital Arts and Culture Accelerator (DACA) programme.

The programme, which was designed to improve the commercial potential and investment readiness of arts organisations, was developed by Arts Council England (ACE) and Nesta. It aimed to explore whether organisations driven primarily by an artistic or cultural mission could also be “commercial enough” to exploit their intellectual property and attract investment from organisations beyond conventional grant funders. It also set out to raise awareness of and appetite for arts and cultural ventures among investors.

But following a concentrated four-month period of advice and professional development, delivered by specialist accelerator provider The Accelerator Network, none of the participants in the DACA programme succeeded in attracting any investors.

Consultant Tom Fleming has concluded that the programme was “impactful as a process,” but “…given that none of the organisations have yet raised additional finance and that some have pivoted back to the normal business within their existing business model,” it achieved “modest rather than transformational impact”.

Investable propositions

Accelerator programmes, on which DACA was modelled, are usually aimed at tech businesses. They offer intense mentoring by experts and other resources to support small groups of companies wishing to commercialise their intellectual property.

Nine arts and cultural organisations, selected from among former participants in the £7m Digital R&D Fund for the Arts programme, took part in DACA and were given support to develop “a set of realistic and investable propositions”. The programme culminated with the organisations presenting their propositions to an audience of potential investors.

Participants included Miracle Theatre, with a proposal for developing the production and distribution of independent ‘made for screen’ theatre; and Firestation Arts Centre, who proposed a cloud-based, subscription model ticketing solution. Metro-Boulot-Dodo’s proposition was to develop a content management system to deliver tours, trails and games for the heritage and museums sectors.

Barriers

The failure of all nine to achieve their goal is attributed to a series of barriers and challenges preventing organisations from getting to a point where they can receive investment. At the heart of these is the conflict between arts organisations’ goal of resilience and commercial investors’ aim of generating “a significant return on investment”.

The report notes: “Arts organisations can all diversify income streams and restructure their business models to allow for greater resilience, but this does not necessarily equate to generating major financial returns… none of the organisations could pivot to the point where it was just about growth.”

Other barriers include:

having to establish trading subsidiaries

determining appropriate rewards for individuals if the venture is successful

low levels of investor awareness and appetite for arts and cultural organisations.

Future potential

Given the outcomes of DACA, the evaluation finds that, with dedicated and intensive support and guidance, it is possible for arts and cultural organisations to develop product ideas which are “at least notionally investable”. It concludes that the accelerator process can help them “gain knowledge on the limits of their commercial ambition or potential and make informed choices regarding their organisational structure and focus going forward”.

Accelerator schemes can, it says, be part of the solution to growing and diversifying investment in arts and culture, but must be “targeted and situated as part of a broader process of increasing management and entrepreneurship skills and capacity, in nurturing investor interest, and in supporting organisational change”.

DACA was found to have played a particularly valuable role in helping organisations to “rapidly test the validity of ventures and propositions – meaning that ideas with potential can be quickly distinguished from non-starters”.

Francis Runacres, Executive Director of Enterprise and Innovation at ACE, told AP that it had particularly helped organisations to develop greater confidence in generating ideas and understanding the different types of finance available. He said: “DACA is a great example of organisations at the forefront of innovation in our sector, and over the coming 2018-22 investment round we will be thinking carefully about how we support that kind of enterprising spirit.”

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